Monthly Archives April 2015

It is a reproduction strategy identified in some natural environments valid for stable environments with a low rate of natural ecosystems disorder. Typical large bodies, long half-life and late reproductive age. Species are based balance and adjust their population dynamics in populations around the K value or capacity (the maximum number of individuals that the ecosystem can support without being damaged species).

Stable systems generate highly developed species, which in turn generate this strategy with great success. Large mammals use this strategy: they have few offspring, allowing them to invest heavily in their care and development. This maximizes the chances of success of the next generation. We as a species, are the culmination of the development of this strategy.

The problem with this strategy is that survival depends very stable environments, which makes the species that inhabit them are very sensitive (fragile) to unexpected changes in the environment. A change in market trend, new technology, fashion, or a legislative change, can end up with a whole market, and the companies operating in it. A specialized liked the stability, and therefore does not like changes.

A further specialization increased fragility. Specialization is an advantage only to defend niches (or survive in natural areas) very small. The turntable needle manufacturers and bearded know well what I mean.

To summarize: The population of R-dependent species that reproduce quickly, as quickly as added chance of survival by creating or identifying opportunities. The type K depend on the carrying capacity of the habitat, i.e. is the maximum population size that the ecosystem can support without the species that inhabit it from damage, depend on the ability of the market to absorb the supply and of its competitors.

It is a reproduction strategy (r) identified in natural ecosystems valid to changing environments with a high degree of disorder. Typical in organisms whose habitat is unstable.

The organisms that colonize these ecosystems are speies adapted to colonize virgin or unstable environments. They are opportunistic species, that, due to their nature, use all their energy in a continuous population growth. Have a high reproduction rate, producing a large number of offspring. By not provide parental care, the mortality rate is huge. They are usually small species, with huge exposure to survival (generate thousands / millions of seeds / eggs or use the speed of playback, such as rodents.) Know that most fail, but keep the few surviving species . In bad times, suffer large declines in population.

A new segment or niche market is an ecosystem to colonize where new companies will come to develop products and services to try to cover this (alleged) demand. At the beginning only few companies arrived, exploring this new market requires a hypothetical based on the error test strategy, with fast cycle times, to check what works and what is that and what is not. Only this will allow them to adjust products and services to real demand and not a demand invented in an Excel.

As the disclosure of the market becomes lucrarive, the entry of new competitors will be fierce. Some will fall and others will survive. These small species will become a food source for species considered K-strategists (next post). Some of the small businesses that survive because they detected a new niche market will be absorbed or bought by larger ones.

Small businesses that survive, will be under worse pressure of the larger ones, which ultimately end up buying the (engulfing) or driving of that segment (ecosystem). It is a dynamic concentration, all for the winner. Finally if the market (ecosystem) changes, so will lose big if they can not adjust in time.

The free market system survives because it allows people to take the initiative they want. The system “knows” that most do not survive, much less succeed, but those who survive will create work and generate new opportunities in a system that is self-replication.

The system is constantly creating new sectors, subsectors, markets, segments and sub-segments, and initiatives that see opportunities in them, and try to do business on the ground of current needs and tastes that change on a daily basis. The system is potential therefore fractal: by any scale replicates itself *. This means that the free market system is made up of small market segments with the same behavior and limitations. Each market segment is in itself a small market system, which when viewed together, form the mainframe market.

The bet today may be tomorrow’s success. Some of these sectors will be predominant in the future, which will allow companies that are positioned there, more likely to succeed than those in mature or declining industries.

Today’s success is the mature market of tomorrow. Inevitably the successes will dilute over time, as new needs, fashions and lifestyles are generated.

Note: Once a big market disappears, can be very profitable niche if you know how to handle. A current example would be stereos tube and needle´s turntables manufacturers.

The new sectors / segments are always chaotic, wild and unstable (lack of regulation, law, business experience, mountebanks selling their magnificent projects, competitors entering sack …) is in these areas where understanding how a R Strategy works, can help us survive (coming soon).

The sectors / segments mature, more stable, more regulated and better adjusted to the supply and demand. In these sectors is where understanding how a K Strategy can be appropriate (coming soon) works.

* Of course the reality around you (the universe in which you live) has a fractal nature.

Note: r and K are two strategies of survival identified in different ecosystems of our planet. All the different ecosysems, are at the same time part of the system you live in.